March 20, 2017

On March 16, President Donald Trump released his budget blueprint for fiscal year (FY) 2018. The budget blueprint is high-level and doesn’t include detailed line-by-line specifics, and only covers discretionary, not mandatory spending. Greater detail will be offered later this spring when the Administration publishes its full budget request, including mandatory spending (including programs like Medicare and Social Security) and tax proposals, likely in May.

Notably, the blueprint released last week proposes deep cuts in funding for federal research at the National Institutes of Health (NIH), a proposal that stands in contrast to the bipartisan sentiment expressed by Congress last fall with enactment of the 21st Century Cures Act which reaffirmed the importance of federally-supported basic, clinical and translational research, and established a mechanism for significant increases to the NIH budget over several years. CLSA is strongly opposed to this (and any) proposal to cut funding for NIH.

Further, the budget blueprint proposes to cut federal funding to the U.S. Food and Drug Administration (FDA), with an increase in user fees. The proposal is short on details, but on its face, appears inconsistent with the pending user fee agreements that were carefully and recently negotiated between industry and the agency (under the previous administration).

The FDA’s current authority to collect user fees expires at the end of this fiscal year, and needs to be reauthorized swiftly for FDA to continue to rely on user fees to support its critical product review activities. CLSA is aligned with our national association partners and supportive of preserving the commitments reflected in the carefully negotiated user fee agreements, and ensuring that these vital programs are reauthorized in a timely manner.

While the President’s budget blueprint serves as an important statement of the Administration’s priorities for the coming fiscal year, it’s important to remember that the budget request is a non-binding document and Congress has the final say on how much and to which programs and activities federal funding will be allocated. In fact, Speaker of the House of Representatives, Paul Ryan (R-Wisc.), said that the president’s spending blueprint is just the beginning of a “very long, multi-stage progress of budgeting.” Specifically, on the question of NIH funding, Speaker Ryan said, “We just passed the [21st Century] Cures Act, just this last December, to increase spending in the NIH, because we really think we’re kind of getting close to some breakthrough discoveries on cancer and other diseases… in Congress you’ll see probably some changes.”

Below is a summary analysis of the president’s budget blueprint’s provisions of importance to the biomedical and life sciences sectors. Questions? Please contact Jenny Carey, CLSA’s Vice President of Federal Government Relations and Alliance Development (jcarey@califesciences.org).

President Trump’s FY 2018 “Budget Blueprint” Highlights

On March 16, 2017, President Donald Trump released his “Budget Blueprint” for fiscal year (FY) 2018. Several of the budget’s many provisions of importance to the biomedical and life sciences sectors are detailed below.

Department of Health & Human Services: The blueprint proposes a total of $69 billion for the Department of Health and Human Services in FY18, representing an overall $15.1 billion (17.9%) decrease from the FY17 enacted level.

“Reforms key public health, emergency preparedness, and prevention programs. For example, the Budget restructures similar HHS preparedness grants to reduce overlap and administrative costs and directs resources to States with the greatest need.”

“Reforms the Centers for Disease Control and Prevention through a new $500 million block grant to increase State flexibility and focus on the leading public health challenges specific to each State.”

Increases opioid misuse prevention efforts by $500 million.

Eliminates $403 million in health professions and nursing training program, noting that such programs “lack evidence that they significantly improve the Nation’s health workforce.”

Proposes “a major reorganization of NIH’s Institutions and Centers to help focus resources on the highest priority research and training activities.” This includes eliminating the Fogarty International Center, which seeks to promote international medical research & collaboration.

Consolidates the Agency for Healthcare Research and Quality (AHRQ) under NIH’s umbrella.

Overall, the Budget “reduces administrative costs and rebalance[s] Federal contributions to research funding.”

FDA: The blueprint doesn’t specify a topline number for FDA.

FDA medical product user fees will be increased “to over $2 billion in 2018, approximately $1 billion over the 2017 annualized CR level.”

Without detailed budget tables, actual cuts/increases are difficult to ascertain. An analysis by CQ notes that FDA received approximately $1.96 billion in user fees in FY2016, $1.36 billion of which came from the non-tobacco drug and device divisions. A statement from the Alliance for a Stronger FDA notes that the budget proposal is “cutting more than a third of the agency’s appropriation and offsetting it with an enormous increase in medical product industry user fees.”

The blueprint also states: “To complement the increase in medical product user fees, the Budget includes a package of administrative actions designed to achieve regulatory efficiency and speed the development of safe and effective medical products. In a constrained budget environment, industries that benefit from FDA’s approval can and should pay for their share.”